Canada Pipeline Update -- May 31, 2024

Locator: 48007CANADA.

Road to Canada: blank check for pipelines.
Road to California: blank check for bullet trains.

Link here.

In a landmark move for the Canadian financial markets, Coastal GasLink LP, partially owned by KKR & Co., is set to initiate the largest corporate bond deal in Canada's history. The pipeline project, located in Western Canada, is preparing to issue up to C$4 billion ($2.9 billion) in bonds to refinance its existing construction debt. This unprecedented offering is scheduled for early June, according to sources familiar with the matter.

The Coastal GasLink project, a 416-mile natural gas pipeline, has faced significant challenges since its inception over a decade ago. Regulatory hurdles, political disputes, and labor issues have contributed to the project's escalating costs, which have more than doubled from the original estimate of C$6.6 billion to C$14.5 billion. Despite these obstacles, the pipeline is nearing completion, necessitating the refinancing of its construction credit facility.

The planned bond issuance, even at the lower estimate of C$3 billion, will rank among the top three largest corporate bond deals ever recorded in Canada. The deal is expected to form part of a broader C$9 billion fixed-income financing strategy for the pipeline, highlighting the substantial financial commitment required to bring the project to fruition.

The Coastal GasLink pipeline is a crucial component of Canada's energy infrastructure, transporting natural gas from the Montney shale formation in Western Canada to the LNG Canada terminal on the west coast. At the terminal, the gas will be converted to liquefied natural gas (LNG) for export, primarily targeting Asian markets. Demand from countries such as China and India is anticipated to support Canadian supply despite competitive pressures from Middle Eastern producers.

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TransMountain

Link here.

May 31, 2024 [Reuters]- The Canadian government has guaranteed another C$1 billion ($731 million) in commercial loans for the Trans Mountain pipeline expansion, taking the total government-backed loan facility to C$19 billion, Trans Mountain’s quarterly earnings statement showed on Thursday. TransMountain The expansion project, which has so far cost C$34 billion, nearly triples capacity to ship oil from Alberta to Canada’s Pacific coast to 890,000 barrels per day. It started commercial operations on May 1 after years of delay.

While the oil industry in Canada, the world’s fourth-largest producer, has welcomed expanded access to overseas markets, opponents of the project are critical of the cost to Canadian taxpayers and its environmental impact.

“We’ve basically written a blank cheque to this project,” said Keith Stewart, senior energy strategist at Greenpeace Canada. “This money could have been so much better spent getting off oil and fighting climate change.”

Prime Minister Justin Trudeau’s Liberal government bought Trans Mountain from Kinder Morgan Inc in 2018 to ensure the expansion went ahead but in 2022, as costs soared, said it would no longer finance the project with public money.

Canada's Version Of California's Bullet Train -- August 5, 2023

Locator: 45350CANADA.

Link here.

(Reuters) - A Canadian government agency has guaranteed fresh commercial loans of up to $2.2 billion to the controversial Trans Mountain pipeline expansion project that has suffered repeated cost overruns. [Figures in US dollars.]

The information disclosed by Export Development Canada showed that a new loan guarantee was signed in July, though it first appeared on EDC's website late on Friday.

Prime Minister Justin Trudeau's Liberal government bought the Trans Mountain pipeline in 2018 from Kinder Morgan Inc to ensure the expansion project got built and provided a $7.3 billion loan guarantee to TMC.

It is meant to unlock Asian markets for Canadian oil, which is mostly exported to the United States now. But the project has been hampered by regulatory obstacles, environmental opposition, and construction delays, and is now anticipated to cost $23 billion, more than quadrupling the $5.4 billion budgeted in 2017. [The construction delays mostly due to regulatory obstacles and environmental opposition.]

The cost blowout and the impact of taxpayer has made the government's ongoing support a contentious issue.

Last year, Finance Minister Chrystia Freeland said that no more public funds would be committed in the project, and TMC has stated that it is looking for external funding.

TTE -- France -- To Become One Of Germany's Main LNG Suppliers -- January 13, 2023

Link here. As I'm typing this WTI continues to melt up despite all the talk about recession and demand destruction.

WTI: up over a buck; up 1.3%; trading at $79.40.

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Canada

Meanwhile, if folks are paying attention ...

Canada's current prime minister has shoved the country's LNG sector under the bus and ceded the fossil fuel story to America.

Link here.

Alberta's Riches -- September 4, 2022

Link here.

Canadian dividends, link here:

Canadian Dollar Drops Below 70 Cents -- May 4, 2020

On April 14, 2020, I wrote that the "alarm" for the Canadian dollar will be if it hits 66 US cents. I would consider, for Canada, 68 cents worrisome.

Today?

The Canadian dollar went a tad under 69 US cents before it recovered a bit and closed at $0.706.

Link here.

Schadenfreude -- May 2, 2019

Updates

May 8, 2019: BC prime minster whinging about high gasoline prices.

May 5, 2019: 24-hour update.

Original Post

Schadenfreude: Vancouver, BC, hit with record gasoline prices. And BC folks love their gas-guzzling SUVs. From Bloomberg:

• unless you've been living under the Geico Rock, you know the backstory ...
• bragging rights: Vancouver, BC, now has the highest retail gasoline on record for a major North American metro -- according to GasBuddy -- 
• Vancouver, BC: $4.80/gallon
• Los Angeles, CA: $4/gallon (traditionally one of the most expensive in US markets)
• a series of refinery shutdowns along the West Coast of North American have sent pump prices surging from San Diego to Seattle. But Vancouver was hit hardest
• the blocked pipeline expansion: prevents 50,000 bbls of gasoline and diesel to get to the Vancouver area on a daily basis
• Vancouver;
• Canada's 3rd largest city
• has just one 52,000-bbl-a-day refinery
• must rely on limited gasoline shipments across the Rocky Mountains from Alberta as well as imports from fuel plants in Washington state
• taxes: add to the problem; 50 Canadian cents/liter
• double whammy: some of the highest house prices; some of the lowest wages of Canada's biggest cities

The best part of the story. Does this sound like President Obama? BC's Premier John Hogan, replying to $4.80 gasoline and the blocked TransMountain Pipeline:

“There is no magic endless supply of refined gasoline products in Alberta or Washington state or, for that matter, anywhere else in an area that would allow us to see more refined product come here,” Horgan said in parliament last week, when asked about the pipeline project.

We can't simply drill our way to lower prices. -- President Obama

By the way, even if the pipeline is approved today, and "they" start building tonight, the price of gasoline is not going to drop any time soon.

#1 industry in BC? Tourism? I don't know but I doubt a lot of Americans want to visit high crime city with high-priced gasoline.

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On The Other Side Of The World

Saudi Arabia: apparently Saudi Arabia's oil production has dipped to 9.5 million bopd but the kingdom is also using record low amounts of oil for direct electricity production. Source: twitter.

Huge Headline But In The Big Scheme Of Things ... Another Nothing Burger; Western Canada Still Landlocked -- March 29, 2019

Enbridge Line 5, Michigan, replacement: stopped.

From wiki:

Enbridge Line 5 is a major oil pipeline in the Enbridge Lakehead System, which conveys petroleum from western Canada to eastern Canada via the Great Lakes states.

Line 5 is particularly notable for passing under the environmentally sensitive Straits of Mackinac, which connect Lake Michigan to Lake Huron. As of December 2013, the line carries 540,000 barrels of oil per day. It carries synthetic crude, natural gas liquids, sweet crude, and light sour crude.

So, a half million bbls of crude oil from western Canada to eastern Canada every day. That will continue until the 65-year-old pipeline is considered unsafe or starts leaking.

A quick read suggests the upper peninsula of Michigan benefited from this pipeline.

By the way, this is a great example of the difference between politics in North Dakota, and politics in Michigan (and New York, and California). North Dakota state government, it seems, works hard to try to come to some solution. In this case, Michigan just shut down the project without trying to find some way to solve the problem. 

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Time To Relax

Good Directions, Billy Currington

Another Blow For Canada's Energy Sector -- March 25, 2019

Updates

March 22, 2019: update on Alberta's decision to cut crude oil production. Venezuela's crude oil to the US dropped to zero for the first time since tracking began several decades ago.  

Original Post 

Link here.

Exxon Mobil Corp. is delaying a $1.9 billion)oil-sands project in Canada by at least a year as the nation’s energy industry grapples with a shortage of pipeline space and government-mandated production cuts.

Exxon’s Canadian subsidiary, Imperial Oil Ltd., had originally planned to bring the 75,000-barrel-a-day Aspen project online in 2022, but is now slowing the pace of development at the site in northern Alberta. Any decision to resume normal activity will depend on future government actions and general market conditions, Imperial said Friday.

The delay is another blow to Canada’s oil-sands industry, which suffered from record low prices last year after a wave of new production overwhelmed the region’s pipeline capacity. That spurred the government of Alberta, where most oil-sands projects are located, to mandate production cuts to drain a glut of crude in storage and revive prices.

The move also reflects Exxon’s increased focus on projects off Guyana’s coast and in the Permian Basin in Texas. The company last week increased its target for Permian production to 1 million barrels a day by 2024 and expanded its estimate for the size of its Guyana discovery to 5.5 billion barrels.

More at the link.

The Market, Energy, Political Page, Part 3, T+46 -- December 21, 2018

Loony tunes: Don wrote early this morning: This is the first time I have seen the value of the loonie below $0.74.

• Canadian dollar: $0.7373.

Don follows this stuff closer than I do and has been following it longer than I have, so he would know. [Actually, the loonie has been lower and it has been trading in a range for the past couple of years, but Don's point is well taken -- the Loonie says Canada is closed to business.]

I remember going to Canada when I was a Boy Scout -- best part of trip -- buying Canadian toffee and I remember how much one could get for an American dollar. My introduction to global finance. Laugh. Had I paid attention, I might have beat George Soros. LOL. See this note from July 26, 2016. Wow, I wrote some "good stuff" back in the day. Not so much any more, it appears.

Loony tunes: I have no trouble "understanding" the gyrations of the stock market. What I do not understand is how economists (not Trump) can go from talking about a GDP of 6% just six months ago to a recession six months from now. Feels like a lot of manipulation going on. But that's fine. If so, this, too, will burn itself out. Meanwhile, some folks are going to do very, very well -- as usual. [Later: perhaps US market manipulation is "our" equivalent of the "Yellow Vest" movement in France, which, by the way, appears to have burned itself out.]

Disclaimer: this is not an investment site. Do not make any investment, financial, job, relationship, or travel decisions based on what you read here or what you think you may have read here.

Speaking of travel: this from the Drudge Report. I did not click on the link; I have not read the article. Simply the screenshot:

LOL. Ninety-nine percent of young folks, when asked why they don't want to join the military, cite "frequent moves" as one of the top ten reasons why they don't want to enlist.

When we returned to the US, back in 1997, after thirteen consecutive years overseas we were surprised that some folks had never lived anywhere other than the county they were currently living in. Most had never even lived in more two different homes. And those that had -- generally same town/city if not the same neighborhood.

Our first stateside posting after returning to the US was LA: lower Alabama.

When our older daughter said she had just moved from Turkey, one of her classmates thought that was a city in northern Alabama; she was asked if they had a mall in Turkey, Alabama. I kid you not. For me, moving from Texas to California would be "living abroad." Same with folks moving from Boston to Texas. Or Nebraska to Portland (Oregon). Bernie won't even move back to Russia.

But if a third did leave, that would leave a lot of room for all those migrants that want to come in. But LOL, a third of Americans "thinking about leaving the US to live abroad." Maybe I misread -- the screenshot simply says "country." Maybe the article is about Venezuela. Or Honduras.

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Time For A Bit Of Organ Music

E. Power Biggs

Canada's SAD Agency Kills Exxon's Plan For Huge LNG Export Terminal Off British Columbia -- December 20, 2018

If one does a "word/phrase" search on the blog for "closed for business," this is the first hit --

KMI, Suggesting Canada Is Closed For Business, To Sell All Canadian Assets -- September 17, 2018.

It appears ExxonMobil has also figured that out -- that Canada is closed for business. This is absolutely incredible.

Don sent me the link. Thank you.

From Reuters:

U.S. oil major Exxon Mobil Corp has withdrawn its WCC liquefied natural gas (LNG) export project in Canada from an environmental assessment.

British Columbia rules require large projects to obtain an Environmental Assessment Certificate before they can be developed.

An examination of the project by the Canadian Environmental Assessment Agency has been going on since February 2015.

LNG demand is growing but environmental groups say exports will boost carbon emissions in Canada, both through gas extraction and the liquefaction process.

Let's see, simple arithmetic suggests that as of February, 2019, the Canada's Stop-All-Development Agency, will have held up this project for four years.

But unlike TransCanada, it appears that Exxon has learned to cut its losses.

Exxon is taking advantage of projects where they might actually be built. From the article:

Exxon’s decision signaled it is concentrating on LNG projects with Qatar Petroleum and a proposed expansion of its chilled-gas operation in Papua New Guinea.

Well, duh.

As a side note: Qatar again shows up in the news. 

Meanwhile, look at what is happening in the US:

One can assume that these projects would have never gotten this far along by now (or would have been killed outright altogether) had Hillary been elected president.

I count eighteen LNG projects in the graphic above.

Random Update On Canadian Oil / Natural Gas Resources -- Rigzone -- November 28, 2018

Link here.

At around 4.5 million barrels per day (MMbpd), Canada is the world’s 5th largest oil producer. Some 75 percent of Canada’s production occurs in the western province of Alberta, having a massive deposit of heavier, harder-to-produce “oil sands.”

Canada has a nearly unlimited hydrocarbon resource, so importing oil nations around the world are increasingly seeking the country to supply resources. Canada’s biggest advantage may be its widening capacity to export. A slow growing population and mature energy demand market make incremental domestic needs rather low.

Currently, most of Canada’s petroleum production is exported, and almost all of that gets shipped south to the U.S. This overreliance on the U.S. market has become a problem for Canada because a shale revolution has meant surging U.S. oil production amid its flat demand. As such, Canada needs to find new growing markets for its domestic oil industry to flourish.

Canada’s natural goal is to reach Asia, responsible for about 70 percent of new oil demand in the world. Exporters are banking on cheaper transport. It takes a little over a week for a ship to reach Tokyo Bay from Vancouver, for instance, compared to nearly three weeks from the U.S. Gulf Coast.

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Gelato --  Main Street -- Grapevine, TX

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The Book Page

I'm in my "historical" Bible phase.

The books that are top shelf on this subject:

• The Book of J, translation by David Rosenberg, commentary by Harold Bloom
• The Bible: A Biography, Karen Armstrong, one of many entries;
• The New Oxford Annotated Bible, New Revised Standard Version With The Apocrypha, Fourth Edition;
• Jesus and Yahweh: The Names Divine, Harold Bloom, c. 2005
• Where Shall Wisdom Be Found, Harold Bloom, c. 2005
• The Torah: The Five Books of Moses, the New Translation of the Holy Scriptures According to the Traditional Hebrew Text

Trudeau Can't Win -- Now The Canadian Environmentalists Want To Derail The One Project That Had A Chance -- October 3, 2018

From SeekingAlpha:

• amid the enthusiasm over the final investment decision for the LNG Canada project by the Shell-led consortium, the project's potential carbon emissions have environmental advocates questioning the feasibility of British Columbia's carbon reduction goals
• "How are we going to meet our legislated greenhouse gas targets when this substantial increase in emissions is happening?" asks Ian Bruce, a director with the David Suzuki Foundation
• the B.C. government maintains the province will meet its climate change targets even with LNG Canada going ahead, saying the project's estimated carbon output will total 3.45M metric tons/year
• but a Ministry of Environment spokesperson clarifies the forecast accounts only for Phase 1 of the project, with two production trains; Phase 2 would include two additional trains, which Bruce and others say could increase greenhouse gas emissions by 8M-9M tons annually
• "This project is a carbon bomb," says Marc Lee, an economist with the Canadian Centre for Policy Alternatives.

Interestingly, if one wants to be consistent in one's reasoning, these folks have a case.

By the way, this is the problem that California now has. The state passed a law that say the state must obtain all electricity from renewable sources by 2045. Everyone knows that won't happen, but it effectively stops any new non-renewable energy projects from here on out. Unless a new non-renewable energy project is offset by a renewable project but that won't happen. Renewable energy projects can't possibly outperform a new non-renewable power project. 

It's Official: Justin Trudeau Owns The Trans Mountain Pipeline -- September 4, 2018

Link here.

The transaction was completed through Trans Mountain Corporation, a subsidiary of the Canada Development Investment Corporation. The total purchase consideration was $4.5 billion in cash.

Meanwhile, CBR, the technology faux environmentalists love -- carbon-spewing diesel locomotives -- LOL: Canadian CBR exports set record in June, surpassed 200,000 bopd. That nearly doubles last year.

Think about that. 200,000 bopd. Trivial. The Bakken produces that much oil in four hours every day. And that Canadian CBR? We're not talking four counties in North Dakota: we're talking practically the entire Canadian oil sector, much of which has been shut down due to pipelines being delayed or shut down completely.

My hunch: if there is no movement with regard to the Trans Mountain Pipeline and if the tea leaves suggest that the earliest -- assuming all goes well -- this pipeline expansion could proceed is in 2021, there will be a huge surge in Canadian CBR. And those trains will enter somewhere along the northern tier (Montana, North Dakota, Minnesota) and will chug through Minneapolis and onto Chicago. 

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Another Fool

It's a fool's errand to predict the price of oil.

From oilprice:

If oil goes higher this winter, all things being equal, it will be on the "back" of "heavy oil."

See light / heavy oil at this wiki link.

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Making America Great Again

By the way, from the linked oilprice above:

“The fundamental picture is the strongest I've seen in quite some time," Kilduff said. "Everybody has got a job, everybody is driving to that job, and they're going to continue to drive to that job no matter what gasoline costs."

Best indication that there are a gazillion jobs out there: Ford F-Series, vans combine for best sales since 2005, F-Series sales increase for 16th consecutive month.

Whistling Past The Graveyard -- SeekingAlpha -- Update On The Trudeau Pipeline Expansion Project

See this post for background to this story.

From SeekingAlpha, "be happy, don't worry."

• Trans Mountain expansion faced a big setback today when the Federal Court of Appeal quashed the government's approval to build the expansion;
• but valuation matters and Canadian heavy oil producers have already discounted the wider-than-normal spreads into the current price;
• crude by rail (CBR) remains the key catalyst to narrowing the discount near term, and this setback for Trans Mountain can actually push producers to ink multiyear crude by rail deals;
• With TMX now uncertain, Canadian oilsand capex will keep decreasing, which would push lower Canadian oil production, resulting in less global oil supplies. This could tighten global oil balances further;
• Because of the discounted valuations, we're bullish on Canadian heavy oil producers as we don't believe this is a material setback on fundamentals. Rather, it's only a setback on sentiment

The writer of that story is betting on the wrong horse. The winner in this race: the Canadian railroads. 

Eh, What Just Happened? -- August 30, 2018

Update

August 31, 2018: a reader who is well versed in legal matters and who has followed this case closely (he/she has relatives in Burnaby) sent me a note with comments and questions. I won't post that but here is "my-not-ready-for-prime-time" reply. From the reply you can probably guess the issues in the original note:

1. I was a bit hasty in suggesting inadequate documentation by the pipeline companies regarding First Nations. You are correct.

2. I strongly believe that the judge in this case had her decision made long before the final judgement was published. It was just a matter of framing it (the arguments/conclusions) to fit the decision.

3. Legally, I am sure the contract reads that the deal is consummated pending a majority vote by the Kinder Morgan shareholders (that occurred yesterday after the judge's verdict; the timing was coincidental). So, even if money has not traded hands, it's a legally binding contract, I'm sure. But it's a man-made contract (not on two stone tablets) so there would be ways, I assume, to "renegotiate."

4. However, Canada needs the pipeline more than anyone is suggesting. They can get the oil out on rail if no other alternatives, but this is a huge sovereign issue -- as I've said, Canada is getting the reputation that a) it's greenness is killing the economy; and, b) "the country can't close a deal."

5. I'm sure some cartoonist will come up with a name for the pipeline that Orca killed.

6. Speaking of which, Trudeau's second mistake (his first mistake was using the orca to kill the Enbridge pipeline some years earlier): he knew this case was in court and would likely suffer the very same fate (nothing was different between the two cases). He should have published an executive order once Canada bought the pipeline stating clearly that Canada would take all necessary precautions to save the Orca and would donate "X" amount of money to environmental clubs dedicated to saving the whale.  The judge only said the company's response was inadequate. An executive order and a tweet by Trudeau would have solved the problem. Assuming, of course, the judge was unbiased going into the case -- a huge, huge assumption.

Original Post 

Wow, I knew this was going to be a huge story, but I think it's a bigger story than most realize. This is going to be fascinating to watch.

See this post for background.

I haven't read the newest stories yet, but as you go through this, remember:

• Trudeau killed the Enbridge Northern Gateway pipeline to British Columbia some years ago by playing the "orca" card -- when it was "cool" to be against pipelines;
• he had to have known that the "orca card" would kill Trans Mountain;
• when he convinced Canadians to buy the Trans Mountain Pipeline he did not tell them that the environmental study was so flawed, one could drive a Canadian Pacific locomotive through it;
• nor did Trudeau tell them that the case was in court and it wouldn't take a rocket scientist to see the flawed environmental study;
• and the flawed environmental study involved exactly what? yes, you guessed it, the "orca"
• the "orca" killed the Enbridge Northern Gateway;
• it will take some interesting legal footwork by Trudeau's government to convince folks that, "hey, this time it's different"; the Enbridge pipeline would have killed the killer whale but the Trans Mountain would not
• bottom line: Trudeau knew all about the orca issue and he knew it from the beginning when he convinced Canadians to buy the pipeline

The interesting thing is that Trudeau could have stopped this from going to court in the first place with some legislative language. But I think he was in India when this story was developing some months ago.

If the articles mention the environment at all, they don't mention (or hardly mention the "orca") and they don't reference the case that set the precedent -- the Enbridge Northern Gateway case.

Alberta pulling out of federal climate change plan until pipeline construction resumes, CBC.

• "we are winning: several BC First Nations celebrate Trans Mountain victory
• the ruling suspends construction on the pipeline indefinitely
• this story says it is a $7.4 billion project

five things about the Trans Mountain pipeline ruling, Vancouver Sun

• this source says it is a $9.3 billion project
• fails to mention the real reason the project was killed

a video, Global News
another video, Global News
another video, Global News
fighting words, CTV

I wonder if Trudeau can sell the pipeline back to TransCanada?

Trudeau Batting A Thousand; What Goes Around Comes Around -- August 30, 2018

See this link for background.

Part 2 of this note is here.

Canada: the country that can't close a deal.

Oil: Canada's big income generator. Now landlocked. Four Canadian pipelines killed outright or stalled.

• Enbridge: Northern Gateyway -- killed by Trudeau.
• Enbridge Line 3: stalled in Minnesota by friends of Trudeau, Obama
• TransCanada: Keystone XL, killed by Obama
• TransCanada: TransMountain stalled but ....

... death knell for Trans Mountain Pipeline expansion project? Some will say yes, some will say no.

But here's the CTV headline: court ruling quashes approval of Trans Mountain.

You can go with the headline or read all the "what ifs", "buts" and, "maybes" in the story ....

This may be most concerning:

The Federal Court of Appeal has quashed Ottawa's approval of the contentious Trans Mountain pipeline expansion.

The decision means the National Energy Board will have to redo its review of Kinder Morgan Canada's project.

In a written decision, the court says the energy board's review was so flawed that the federal government could not rely on it as a basis for its decision to approve the expansion.

Wow, what if the new review suggests that the project could do irreparable harm to British Columbia?

I can't imagine this getting resolved within two years, and, wow, the First Nations have huge leverage and are in a win-win -- either they kill the project and get a psychological victory, or they cash in. Not telling what they will do, but I can guess.

Investors? Yawn. Apparently the share price was baked into the court ruling. On a down day for the market, TRP is down about half a percent. Yawn.

Back to Trudeau. Maybe time to "work" with Trump on trade.

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Idle Rambling

There seems to be a consistent story line when it comes to oil companies / pipeline companies and "First Nations" (generic): a failure on the part of the oil companies / pipeline companies to maintain really, really good notes and really, really good documentation.

It seems that "First Nations" seldom enter the process early on -- for whatever reason -- and then only after the decision affects them ("First Nations") do they get actively involved.

The oil companies / pipeline companies need to aggressively get the "First Nations" involved from the get-go and if they get no cooperation, get the courts involved early, and keep great, great documentation.

And, as noted, early in the blog -- wow, I must have written this a decade ago -- "First Nations" can and will claim "ownership" on any land in the western hemisphere.

Canada At A Tipping Point -- June 27, 2018 -- Portal, ND, In The News -- Bloomberg

Over at "the big stories," I have a section on the US Energy Revolution. This page was begun back in early 2013, and I continue to add to it, but not consistently. There's just too much going on to keep up.

I also have a section called "Europe at a tipping point." The page begins with this short commentary and links:

European Energy became a big story on May 18, 2013, when the EU Council President predicted that  Europe might become the only continent in the world to depend on imported energy.

Within that story:

• The European renewable energy has been a disaster. 
• The future of fracking in Europe and Great Britain is "on hold."
• Europe is running out of fossil fuel. Great Britain will run out of natural gas in three years.
• The Crimean debacle, spring, 2014: Russia inks huge natural gas deal with China in response.

It looks like we may have to add Canada to this list. Talk about a dismal report regarding Canada. This article from oilprice needs to be read slowly. Trudeau seems to be taking Canada down the same road as Venezuela and Australia but doing it slightly differently. The countries may be doing things differently and for different reasons, but the outcome could certain by the same.

The more I read about global energy and the decisions some foreign leaders are making, it appears more and more there are only three countries that are really serious about growing their energy sector: Russia, Saudi Arabia, and the United States.

The linked oilprice story takes you to a Bloomberg story. Read them both.

The oilprice story begins:

Canada has the world’s third-largest crude oil reserves, but the country seems determined to pretty literally keep these in the ground. This determination becomes strikingly obvious when Canada is compared with its southern neighbor.

In the United States, they write, the number of oil and gas rigs are increasing—currently at its highest level since 2015, the height of the oil price crisis. In Canada, on the other hand, there has been an exodus of oil majors including Shell, ConocoPhillips, and Equinor, among others.

In the United States, capex in the oil industry is forecast by an Oil and Gas Journal poll to rise by 9.1 percent to US$132.5 billion this year alone. In Canada, total oil investment is seen falling by 2 percent to US$30.11 billion (C$40.1 billion).

Of course, there is a clear difference between the energy policies that the two neighbors’ governments are pursuing. Washington is all about energy independence, even energy dominance. Trump’s administration has been working consistently towards ensuring the best possible investment climate for oil and gas producers, much to the chagrin of environmentalists and the renewable energy industry.

Ottawa, conversely, has been clearly in favor of what might very loosely be called the green lobby. This has proven a challenge recently, as the federal government had to step in and buy the Trans Mountain pipeline expansion project from Kinder Morgan after the company refused to move forward with it in the face of strong provincial government opposition from British Columbia. Despite this move, caused as much by desperation as by any desire to have the pipeline built, Ottawa has on the whole been playing against oil.

And much, much more.

The Canadian dollar is worth US 75 cents.

Now the original Bloomberg article. It begins:

In a rural patch of prairie along the U.S.-Canadian border, the towns of Portal, North Dakota, and North Portal, Saskatchewan, couldn’t be closer. They share a fire department, and the first eight holes of the local golf course are in Canada, while the ninth and the club house are in the U.S.

But here in the Bakken shale patch, one of North America’s most-prolific oil fields, the U.S.-Canada border represents a drillers’ divide.

Spurred by a surge in crude prices, North Dakota’s production is rising more than three times faster than its counterpart in the Bakken region of Saskatchewan. The output difference between the two countries runs deeper than the shared field.

While U.S. drillers deploy more rigs than any time since 2015 amid a fracking surge in the Permian Basin, companies including ConocoPhillips, Royal Dutch Shell Plc and Equinor ASA have sold operations or pulled out of Canada’s oil sands, the world’s third largest source of crude reserves.

And more:

A shortage of pipelines and a regulatory environment that’s often slower and less certain than in the U.S. has helped spark the flight of capital southward, said Tom Whalen, chief executive officer of the Petroleum Services Association of Canada, a trade association representing oil servicing companies.

“We [Canadians] are kind of dying by our own sword,” Whalen said in a phone interview. “We are making it very difficult to do business.”

And more:

A new tax law in the U.S. has helped oil companies by reducing the corporate rate and allowing companies to write off some assets sooner than in the past.

Routine licensing for a well in Alberta takes 79 to 119 days versus 30 to 60 days in Texas, according to a report last year by the Canadian Association of Petroleum Producers.

Enerplus Corp. Chief Executive Officer Ian Dundas estimates that 10 years ago, his company allocated 90 percent of its capital spending to properties in Canada and 10 percent to its U.S. holdings. Those percentages have been reversed, he said in an interview.

NDIC reported today that Enerplus has permits for a 10-well pad in Antelope oil field.

Much, much more at the article. 

Canadian Dollar Breaks "75-Cents" -- June 21, 2018 -- Longest Day Of The Year; Canadian Oil Selling At A $24/Bbl Discount

Canadian dollar goes below "75 cents." This morning -- US$0.7496.

Oh-oh: From this post --

Canadian heavy crude prices have traded at an average discount to West Texas Intermediate future of almost $22 a barrel this year, about 70 percent bigger than the average discount last year, after existing pipelines filled to capacity amid a surge of new production from Suncor Energy Inc.’s Fort Hills oil sands mine.

The discount widened 50 cents to $24 a barrel on Wednesday.

Back-of-the-envelope: Canada exports in excess of 4 million bbls of oil to the US every day. 4 million bbls/day x $24/bbl = in round numbers, $100 million each day is what Canada is losing -- just on exports to America because they can't get the pipelines built. $100 million / day = $3,000 million / month?

Disclaimer: I often make simple arithmetic errors.

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Back to the Bakken

Active rigs:

$65.39→	6/21/2018	06/21/2017	06/21/2016	06/21/2015	06/21/2014
Active Rigs	62	59	27	77	189

RBN Energy: a drill down report on emerging natural gas transportation bottlenecks in Louisiana.

The Market And Energy Page, Part 2, T+ 46 -- Making America Great Again -- April 15, 2018

I was going to post a number of stories at this post, but this one story is so incredibly important, it will be the only one posted.  A huge "thank you" to a reader for sending me this article.

Making America Great Again: from the Houston Chronicle -- global petrochemicals growth shifts from Middle East to Gulf Coast. This is quite a story:

For the first decade of this century, U.S. petrochemical producers, such as LyondellBasell of Houston and Chevron Phillips Chemical of The Woodlands, flocked to the Middle East, spending years developing partnerships and building massive facilities to tap cheap natural gas feedstocks to make plastics and other materials.

But now, the U.S. Gulf Coast has become the locus of global petrochemical growth, outpacing the Middle East in a shift that’s only expected to accelerate as North American shale producers siphon more natural gas from vast reserves in West Texas and elsewhere. Even Saudi Arabian companies, including the government-owned Saudi Basic Industries Corp. and Saudi Aramco, are making the shift, with plans to invest billions of dollars to expand chemical operations here and develop new partnerships with Houston and other U.S. firms.

The migration of petrochemicals manufacturing is more evidence that the Gulf Coast is becoming an energy hub rivaling the Middle East, which for a half century has played an outsized role in the global economy and geopolitics. It shows that the so-called shale revolution pioneered by Houston and Texas producers is continuing to reshape global markets, transform trading relations and lift the region’s economy, which so far has attracted more than $60 billion in petrochemical investments - an influx of capital, according to the Greater Houston Partnership, that will support tens of thousands of jobs for years to come.

The shift from the Middle East to the Gulf Coast is driven by two simple facts: Supplies of natural gas liquids such as ethane, a feedstock for petrochemicals and plastics, are dwindling to the point of shortage in Saudi Arabia and elsewhere, but growing rapidly here as drilling in the Permian Basin in West Texas and other shale plays floods the market with cheap, abundant raw materials for chemicals. U.S .ethane production is projected to increase nearly 60 percent to 2 million barrels a day by 2021, up from 1.26 million barrels a day in 2016.

And more:

That dynamic is pushing some of the Middle East’s premier energy companies to expand along the U.S. Gulf Coast with multibillion dollar projects that underscore the industry’s faith in the longevity of the shale boom. Coinciding with the recent visit of Saudi Crown Prince Mohammed bin Salman, who is leading a drive to diversify an economy long centered on oil production, Saudi Aramco announced that its Houston-based refining subsidiary, Motiva Enterprises, will make its first major foray into petrochemicals through two separate agreements with Illinois-based Honeywell UOP and TechnipFMC, which has headquarters in Houston, Paris and London.

Update On The Canadian KinderMorgan TransMountain Pipeline -- Now It's Getting Serious - Wine Boycotts -- March 10, 2018

Update on the Canadian's Kinder Morgan TransMountain pipeline from Alberta to British Columbia that is being held up by British Columbia. Burnaby is back in the news. I've blogged about Burnaby before; here is one link. With a name like that, I keep thinking Burnaby is in Australia. Whatever.

A reader writes:

A relative of ours lives in yuppie, high-rise, water-view Vancouver - so she's surrounded by urbane "Keep it in the ground" pacifist socialists.  She's lived and worked around the world and has a great grasp on the fact that when the USA sneezes, Canada catches cold. 

About a month ago she said it would take an army to get the expanded TransMountain (KinderMorgan) pipeline through Burnaby to the coast.  Just a couple days ago, she totally re-read her tea leaves and said it will happen sooner than she ever thought.

Background tidbit: There's been a tiff between Alberta's Governor Rachel Notley (Alberta wants to ship oil, obviously) and the governor of BC.  Alberta had banned the import of BC wines -- 😏

Trudeau has oddly enough cut through some of Burnaby's red tape in the permitting process.

Anyway - apparently there was some well managed publicity that seemed quite effective.  The gist was that USA was supporting the obstruction of Canadian pipeline expansion in an attempt to sell US oil and decrease Canadian competition.  There was also other publicity along the same lines blaming the Russians.  She summarized by saying that now the argument is framed such that if you don't support pipeline expansion you aren't a patriot.

I chuckled and told her throughout all the twists and turns of DAPL, we had never blamed the Canadians.

So, that's the background. Today, an article from oilprice.com: Alberta is ready to decide on the nuclear option -- stop shipping oil to the refineries in British Columbia! And it turns out the vignette related above is absolutely accurate -- right down to the "wine embargo." From the linked article:

Alberta’s government may be considering a suspension of crude oil shipments to British Columbia in the latest episode of what is turning into a drama series starring Canada’s biggest oil producer and its neighbor who wants to stop the extension of a crude oil pipeline to its coast.

In the provincial government’s Speech from the Throne, Alberta’s Lieutenant Governor Lois Mitchell said that all options for retaliation against B.C.’s opposition to the Trans Mountain expansion are on the table. Mitchell recalled a decision by a former Alberta PM in the early 1980s to reduce oil flows to refineries in eastern Canada by 15 percent in reaction to the federal government’s National Energy Program that Alberta saw as a threat to its energy industry.

[BC took action to stop the pipeline.] In retaliation, Alberta announced a boycott on B.C. wine imports and on electricity imports. B.C. changed its mind about a proposal to change the rules for shipping oil through its territory that would have reduced oil flows for the duration of a study on oil leak response mechanisms. The study would have taken about a couple of years and many saw the proposal as a stalling tactic.

The federal government, meanwhile, has so far proved incapable of making the two provinces kiss and make up. At a recent meeting with the public, PM Justin Trudeau reiterated that Ottawa stood behind the Trans Mountain expansion, and that has been about it from the referee.

With such a history, it was only a matter of time for Alberta to strike back with something bigger than a wine boycott.

I never realized the BC wine industry had that much influence. Truly amazing.